The tanker market retained its weakness throughout the month of October, according to the latest monthly report from OPEC. According to the report, the tanker market remained weak in October, with dirty tanker rates depressed by ample tonnage availability, while tanker demand remained low as COVID-19 disruptions weighed on trade. High inventory and unwinding floating storage also negatively impacted dirty tanker rates. After a brief pick-up in the Mediterranean last month, clean tanker rates in October turned lower West of Suez. East of Suez rates managed an increase on gains on the Singapore-to-East route.
Spot fixtures
Global spot fixtures declined m-o-m in October after stepping up the month before, falling by 0.9 mb/d, or 6% m-o-m, to average 14.0 mb/d. The decline occurred because Chinese buying – which has been an important pillar of support for tanker demand since the tail end of the second quarter – has come down sharply as independent refiners used up quotas, resulting in a pause in activity. Spot fixtures were a massive 5.9 mb/d or almost 30% lower than the same month last year, reflecting the overall muted environment in the COVID19 era.
OPEC spot fixtures averaged 9.52 mb/d in October, representing a drop of 3%, or 0.3 mb/d, m-o-m compared with the same period last year. OPEC spot fixtures were 29%, or almost 4 mb/d, lower, reflecting in part production adjustments by OPEC+ countries. Fixtures from the Middle East-to-East fell back in October, dipping 1%, or around 0.1 mb/d m-o-m, to average just under 6 mb/d. Y-o-y, this represents a decline of 2.0 mb/d or 25%. In contrast, Middle East-to-West fixtures edged up 3% in October, recovering some of the previous month’s decline. Fixtures on the route averaged 0.9 mb/d, which was still 0.4 mb/d, or 31% mb/d, lower compared with the same month last year, as crude import demand remained sluggish in the Atlantic basin. Outside of the Middle East, fixtures dropped 10%, or 0.3 mb/d, m-o-m to average just under 2.6 mb/d. In annual terms, fixtures were down by 36% or 1.5 mb/d.
Sailings and arrivals
OPEC sailings edged slightly higher m-o-m in October, averaging 20.4 mb/d, compared with a high so far this year of 25.5 mb/d recorded in April. The increase came as Libyan barrels began to return to the market at the end of September. Y-o-y, OPEC sailings were 4.6 mb/d, or 19%, lower. Middle East sailings averaged 14.7 mb/d, representing an increase of 0.3 mb/d, or almost 2% m-o-m, down 3.5 mb/d, or just shy of 20% compared to the same month last year. Crude arrivals saw across-the-board gains in October compared with the previous month. Arrivals in West Asia led gains, increasing 10%, or 0.5 mb/d, m-o-m to average 5.2 mb/d. North American arrivals recovered from the previous month’s decline to average 8.1 mb/d, representing a m-o-m increase of less than 4%, or 0.3 mb/d. Arrivals in Europe rose by slightly more than 1% m-o-m to average almost 10.1 mb/d. Far East arrivals rose 1% m-o-m to average 8.5 mb/d in October.
Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates declined further in October, falling 10% m-o-m on average, as tonnage demand continued to be weak and the unwinding of floating storage increased availability. Rates on the Middle East-to-East route fell a further 8% m-o-m in October to average WS28 points. Y-o-y, rates were more than 80% lower compared with the same month last year. Rates on the Middle East-to-West route were also 12% lower m-o-m, to average WS18 points. Y-o-y, rates were 78% lower. Rates also dropped on the West Africa-to-East route, decreasing 11% m-o-m to average WS31 points and down 76% compared with October 2019.
